Support

A cookie is a piece of data stored by your browser or device that helps websites like this one recognize return visitors. We use cookies to give you the best experience on BNA.com. Some cookies are also necessary for the technical operation of our website. If you continue browsing, you agree to this site’s use of cookies.

Events

Bloomberg Next marketing services allow clients to elevate their brands and extend their reach through our established and trusted expertise, enhanced with engaging event production, appealing design, and compelling messaging.

The bills basically would roll back 1993 amendments to the Federal Rules of Civil Procedure that allow parties and their attorneys to avoid sanctions for filing frivolous claims if they withdraw the claims within 21 days after a motion for sanctions is served.

Use of Sanctions

The sanctions would help deter baseless actions, Grassley and Smith said in a joint release.

“Law-abiding Americans with a legitimate legal grievance are entitled to their day in court, but unscrupulous attorneys who file frivolous lawsuits stand in the way of valid claims and clog our legal system,” Grassley said. “Moreover, they end up hurting businesses that must devote resources to unnecessary legal expenses.”

Similar bills have been introduced without success in prior congresses, including in 2013, 2011 and 2005. Plaintiffs' attorney Ira Schochet, a New York-based partner at Labaton Sucharow LLP, suggested that the latest bills are unlikely to pass in the current Congress despite the Republican majority in the House and Senate.

“I believe that there are a sufficient number of Democrats and even some Republicans who see through this effort to erect barriers to valid claims so as to be able to defeat the bill at least in the Senate, by filibuster or otherwise,” Schochet told Bloomberg BNA Feb. 6.

According to Grassley and Smith's release, the annual direct cost of American tort litigation is estimated at more than $250 billion.

Increase in Damages, New Actions

The U.S. Chamber of Commerce's Institute for Legal Reform also suggests that plaintiffs' attorneys recover more and more every year, even as new state and federal causes of action arise. For example, in a December report, “Lawsuit Ecosystem II,” the ILR noted that federal securities class actions resulted in $1.1 billion in attorneys' fees, almost twice that of the prior year.

Matt Webb, ILR's senior vice president for legal reform policy, told BBNA that the bills, if enacted, “would put real teeth back into the law” by penalizing those who file frivolous claims.

“We commend Senator Grassley and Congressman Smith for introducing this legislation to combat our country’s litigation epidemic,” Webb said in an e-mail. “Phony lawsuits and wasteful litigation have resulted in increased insurance costs, job losses, and a near total breakdown of attorney accountability.”

Discourage All Claims

However, Schochet argued that rather than discourage frivolous filings, the bills would deter “all litigation” without regard to merit.

Schochet said that defendants already have “ample protection.” He added that there has been “no empirical support whatsoever” that the 1993 amendments resulted in a material amount of baseless claims.

One benefit of the current rules is that a defendant may put a plaintiff on notice about a potentially meritless claim, before significant legal expenses are incurred on either side, Schochet said. On the other hand, the pre-1993 regime had the effect of “unclogging the courts,” he said.

“Indeed, the old rule resulted in numerous strategic motions by defendants designed to bludgeon plaintiffs into dismissing their claims, increasing by a significant extent satellite litigation that the courts needed to resolve,” he said. “It also stood as a sword of Damocles over the heads of those who suffered injury at the hands of deep-pocketed defendants that controlled most of the evidence that would need to be presented to establish liability.”

Moreover, Schochet pointed to the 1995 Private Securities Litigation Reform Act, noting that courts in securities actions must at the conclusion of the litigation determine whether the rule against frivolous litigation has been violated. If so, they must assess an appropriate sanction, he said.

“In short, the proposed legislation is presented as a remedy for a problem that doesn’t exist,” Schochet said.

To contact the reporter on this story: Yin Wilczek in Washington at ywilczek@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com

All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.

Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)

Notify me when updates are available (No standing order will be created).

This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.

Put me on standing order

Notify me when new releases are available (no standing order will be created)